General information about how home insurance claims commonly work in Alberta. Your own policy wording decides what's covered, so read it and ask your insurer or broker to confirm anything that matters to you.
This is the most expensive thing homeowners misunderstand about roof claims, and it costs them thousands quietly.
Actual cash value (ACV) is replacement cost minus depreciation for the age and wear of what was damaged. Replacement cost value (RCV) is the full cost to replace it. Some RCV policies pay in two parts and hold back depreciation (the *recoverable depreciation*) until the work is done. Check your policy wording for how and when.
If you take the first cheque and don’t do the work, you generally keep the ACV and give up the rest.
How the money actually moves
A typical sequence on a replacement-cost hail claim (the numbers are only an illustration):
- You report the loss. Your adjuster assesses and produces a scope with a replacement cost of, say, $14,000.
- Depreciation is applied for the age of the roof: say $4,000 on a fifteen-year-old shingle.
- You receive an ACV cheque of $14,000 minus $4,000 minus your deductible.
- You have the work done. Your contractor invoices the actual completed scope.
- You submit the invoice and completion documentation. The insurer releases the $4,000 recoverable depreciation.
- Net out-of-pocket: your deductible, plus anything you chose to upgrade.
Where people lose money
- Taking the ACV cheque and not doing the work. The depreciation is gone, and you still have a damaged roof that will be harder to claim next time.
- Doing the work but never submitting the invoice. Don’t count on anyone chasing you for it.
- Having the work done cash-in-hand with no paperwork, which leaves nothing to submit.
- Missing a time limit. Some RCV policies pay in two parts and hold back depreciation until the work is done. Check your policy wording for how and when.
ACV-only policies, which are a different problem
Some policies, particularly on older roofs, provide actual cash value only, with no recoverable depreciation at all. On a twenty-year-old roof that can mean a settlement covering a small fraction of replacement. This is worth knowing *before* a storm, because it’s a decision you can still change. Read your policy for “actual cash value” or a roof-specific schedule; some insurers apply ACV-only terms to roofs past a certain age even where the rest of the dwelling is on replacement cost.
Why the contractor’s paperwork matters here
The depreciation is released against a completed, invoiced scope that matches what was approved. A contractor who works off a handshake, invoices a round number with no line items, or completes a different scope than the one approved creates exactly the friction that delays or reduces that release. Itemised documentation is how you get the second cheque.
How do I find out whether my policy is ACV or RCV?
Read the dwelling coverage section, or ask your broker directly. It’s a fair question and takes them a minute. Ask specifically whether the roof is treated differently from the rest of the dwelling, because on older roofs it can be.
How long do I have to claim the recoverable depreciation?
It varies by policy and it is a real deadline. Find the number in your wording, and diarise it the day you get the ACV cheque. Don’t count on a reminder.
Can I keep the ACV cheque and do a cheaper repair?
You can generally choose not to do the work. You just forfeit the depreciation. What you cannot do is claim the depreciation against work that wasn’t done or was invoiced at more than it cost. That’s a false statement to an insurer.
Does my deductible come off the first cheque or the last?
Usually the first, which is why the ACV cheque can look surprisingly small. It doesn’t mean your claim was underpaid, so check whether depreciation was withheld before concluding anything.
Where the facts on this page come from. If a source has changed since we last checked, tell us and we'll fix the page.
- Home insurance · Financial Consumer Agency of Canada
- Insurance 101: The insurance claims process · General Insurance OmbudService
- Hail and insurance · Insurance Bureau of Canada